Friday, June 1, 2012

Nokia calls Google's EU antitrust complaint "frivolous" and a waste of time and resources

I just reported on Google's EU antitrust complaint against Microsoft and Nokia, and subsequently saw that Nokia has meanwhile issued a statement. I'll now quote it, and comment on it, passage by passage:

"Though we have not yet seen the complaint, Google's suggestion that Nokia and Microsoft are colluding on IPR [Intellectual Property Rights] is wrong. Both companies have their own IPR portfolios and strategies and operate independently."

Patent transfers from and to non-practicing entities are a reality. Google itself plays that game. Google also did a patent deal with Mosaid last year. Chances are that Mosaid used some or all of the $11 million it received from Google to fund its efforts to monetize those former Nokia patents. Last year, Intellectual Ventures, which also received funding from Google at some point, filed a lawsuit against Motorola, a couple of months after Google had announced its intent to acquire Motorola. Through its voluntary dealings with those entities, which go beyond mere license deals (or settlements), Google financially contributes to the industrialization of patent monetization, and sometimes this comes back to haunt Google.

My personal take on non-practicing entities has always been that there's nothing wrong with the concept known as division of labor, provided that the patents they monetize are legitimate. In terms of which patents should and should not be granted, I don't agree with any large tech company, whether it's Apple, Google, IBM, Microsoft, Nokia, or Oracle.

"In each case, any commitments made for standards essential patents transfer to the acquirer and existing licenses for the patents continue. Had Google asked us, we would have been happy to confirm this, which could then have avoided them wasting the commission's time and resources on such a frivolous complaint."

Two days ago I just reported on an important development in a UK litigation brought by IPCom against Nokia. The court told IPCom that it wasn't going to get an injunction against Nokia over a standard-essential patent in light of a FRAND licensing commitment IPCom made in 2009 with respect to standard-essential patents it had acquired from Bosch. That FRAND declaration enabled IPCom to avoid formal EU antitrust investigations that might otherwise have resulted from a Nokia complaint. While a company's voluntary commitment (IPCom even said that it never denied its FRAND obligations) doesn't make new law, the European Commission clearly achieved that everyone in the industry realized that Brussels doesn't want companies to shed their FRAND licensing obligations by selling standard-essential patents to third parties. And Nokia's complaint had enabled this.

It should always have been clear that Nokia, which complained about the Bosch-IPCom deal a few years ago, would adhere to the same standard it advocated in a similar context.

"We agree with Google that Android devices have significant IP infringement issues, and would welcome constructive efforts to stop unauthorised use of Nokia intellectual property."

I'm sure Google would deny that its EU complaint concedes that "Android devices have significant IP infringement issues". But Nokia presumably bases this claim on the fact that Google wouldn't have to worry about Mosaid's assertion of former Nokia patents if it was sure of its (and its partners') ability to defeat such claims in court.

Courts in several countries have found Android to infringe third-party patents. That's a fact.

"Nokia has an active licensing program with more than 40 licensees. Companies who are not yet licensed under our standard essential patents should simply approach us and sign up for a license."

Google's Motorola would likely say the same, but there's a fundamental difference between Nokia's licensing business and Motorola's assertions of standard-essential patents against Apple and Microsoft. Motorola was unable to show to the ITC even one license deal that had terms consistent with what it demanded from Apple and Microsoft. Judge Shaw wrote in his initial determination on a Motorola complaint against Microsoft that "there is no evidence that any company would agree to the offer that Motorola sent to Microsoft". Instead, "the evidence supports Microsoft's conclusion that Motorola was not interested in good faith negotiations and in extending a [F]RAND license to it". So far, there's no indication whatsoever that Nokia makes prohibitive demands.

In my opinion, FRAND abuse can happen even prior to a lawsuit being filed, such as by making Googlorola-style demands that are only meant to pave the way for seeking injunctive relief. But it's impossible for antitrust authorities to investigate every holder of standard-essential patents at all stages. Regulators have to set priorities and focus on real issues. Thus far, Google's allegations are far too vague to give the impression that this is a good use of regulatory resources. There are indications that Google is playing a political game here, hoping that the Commission will have to look into the Mosaid conspiracy theory only in order to avoid the impression of being biased against Google. But the fact that some companies, including Google itself (through its newly-acquired subsidiary Motorola) abuse standard-essential patents doesn't mean that every complaint in this wider context will result in formal investigations.

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About Me

Florian Mueller is an app developer who used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.